405 Green

GMO Regulation and Acceptance-An International Trade Perspective: 

GMO Regulation and Acceptance- An International Trade Perspective 2005 International Biotechnology Conference October 12, 2005 Des Moines, Iowa

Outline: 

Outline Introduction of Issues/ International Grain Trade Coalition What regulatory challenges will determine the fate of trade? What are the options for Adventitious Presence and what would be the costs?

Slide3: 

World Bulk Grain Systems Characteristics Most transboundary movement of grain used for food, feed or for processing is shipped by bulk Bulk system is characterized by high volumes to achieve low costs (economies of scale) Impossible to keep varieties (events) totally separate Commingling occurs in each link of the supply chain

Slide4: 

The world bulk grain handling is a fungible and flexible system, focused on efficiency Grain changes hands many times between the seed supplier and the food manufacturer

Slide5: 

World Bulk Grain Systems – Zero Thresholds impossible to achieve Adventitious presence of GMOs will occur in all transboundary shipments of all commodities (both GMOs and non-GMOs) shipped from countries having GMOs in commercial production Also, non-GMO shipments from non-GMO countries are exposed to adventitious presence of GMOs in the global transportation and handling system

Cartegena Protocol on Biosafety (BSP): 

Cartegena Protocol on Biosafety (BSP) Documentation Adventitious Presence Approval Information and uniformity Costs of implementation Liability

Slide7: 

COCERAL GAFTA NAEGA, NCGA, WETEC, US Grain Council, US Wheat Associates, NGFA ANIAME, APPAMEX Hungarian Grain and Feed Association Solvent Ectractors‘ Association, Soybean Processors Association Russian Grain Union CEC AWB Canada Grains Council IGTC Membership ABIOVE, ANEC

IGTC Members: 

IGTC Members ANIAME APPAMEX AWB Limited Canada Grains Council Centro de Exportadores de Cereals COCERAL Grain and Feed Trade Association Hungarian Grain and Feed Association National Grain and Feed Association North American Export Grain Association National Corn Growers Association Solvent Extractors’ Association of India Soybean Processors Association of India US Grains Council US Wheat Associates Wheat Export Trade Education Committee

Slide9: 

Need to maintain the primacy of the WTO as the arbiter of barriers to trade

Slide10: 

International Trade in Grains and Oilseeds amounts to approx. 300 mln tons - all trade impacted by BSP -

Slide11: 

International Trade in Grains and Oilseeds – all trade impacted by BSP Exporting Importing Countries Countries Wheat 7 over 100 Maize 5 60 Rice 6 90 Soybeans 5 50

IGTC’s Objective: 

IGTC’s Objective To implement the Protocol to protect the world’s biodiversity while maintaining the benefits of the current low cost global handling and transportation system.

Potential Impacts -- Costs: 

Potential Impacts -- Costs Compliance costs increase exponentially as AP thresholds become lower Compliance costs are unevenly distributed across the supply chain– e.g. importers with low volumes & inefficient infrastructure bear disproportionately higher costs Compliance costs are unevenly distributed across commodities (wheat, maize, barley, soybeans, rapeseed, cotton, etc.) The scope of BSP will influence the size of compliance costs – the following observations characterize these costs:

Slide14: 

What Documentation Will Be Required? A Case Study: Identifying LMOs in an Maize Cargo Half of all US maize production is biotech Ten biotech maize varieties in commercial production in the United States Adoption rates vary by state, by trait and by year Adoption rates highest in major exporting states Profile of Maize Demand 50% fed locally to livestock 25% shipped to dry or wet millers 25% exported

Slide15: 

What Documentation Will Be Required? A Case Study: Identifying LMOs in an Maize Cargo A 58,000 metric ton vessel Loaded from 52 river barges Averaging 1100 metric tons each Sourced from hundreds of farms From 16 locations in six states Vessel contains 9 different LMOs Shares in vessel vary from less than 1% to 18% But, share of LMOs in vessel does not correspond to share of LMOs in production

Slide16: 

What Documentation Will Be Required? A Case Study: Identifying LMOs in an Maize Cargo Without testing each cargo: it would be impossible to indicate whether a vessel definitively contains certain LMO varieties it would be impossible to indicate the percentage of each variety in a vessel. is only possible to indicate that a vessel “may contain” any approved varieties in production in country of origin (current operations)

Slide17: 

What Testing Protocols Will Be Required? Testing for LMOs in Import Cargoes Costs at import would be equal to or greater than costs at export (between $1 million and $87 million annually) depending on: Existence of laboratories in importing country Turn around time for laboratory testing Five to seven days normal One to three days expedited But, test results will differ due to Different testing protocols Different samples Uncertainty, error rates

Slide18: 

How Will Importers Handle Adventitious Presence of Unapproved Varieties? Due to shared infrastructure, transportation facilities Adventitious presence of LMOs will occur in all transboundary shipments of all commodities exported by countries with LMO production Adventitious presence of LMOs will occur in non-LMO commodities (wheat, rice) Adventitious presence will occur in identity-preserved shipments from countries with no LMO production

Slide19: 

Direct Costs of Port Delays

Slide20: 

What Thresholds for Adventitious Presence Will Be Established? Costs Double, Quadruple As Thresholds Fall

Slide21: 

What Testing Protocols Will Be Required? A Case Study: Annual Cost of Testing for LMOs in US and Argentine Maize Exports

Slide22: 

Costs of Identity Preservation: For two countries (Japan, Europe) and two commodities (maize, soybeans) annual cost of Identity Preservation: $100 Million Increased Coordination and Control Requires 12 to 18 month versus 3 to 6 month advance planning Re-engineered food chain Protection of approved LMOs from bulk commodities requires segregation in planting, harvesting, transportation, storage from farm to vessel Heightened risks and liabilities Potential for breakdown, commingling at every stage

Slide23: 

Compliance Costs Will: Increase as more farmers adopt LMO crops Increase as more countries adopt LMO crops Increase as more LMO crops are developed and commercialized Increase as more traits are combined/stacked Increase as testing technology improves Increase as thresholds are reduced

Slide24: 

Compliance Costs Will: Be borne by countries with large import volumes (Japan, South Korea, China, Mexico, EU) Fall disproportionately on smaller importers (developing countries) who pay higher per unit costs Be spread unevenly across commodities Be spread unevenly through the global food chain Increase the cost of food and feed, particularly to developing countries Increase the cost of food aid

Slide25: 

Unintended Consequences: Substitution of processed products (meal, oil, meat) for raw, unprocessed products (soybeans, maize) because BSP does not cover processed products. Raises food import costs Decreases quality Moves jobs to exporting from importing countries Increased vertical integration of supply chain Reduces traders, shippers risks

Slide26: 

Before Final Implementation Decisions Countries Should Evaluate: Costs of different options Who will bear the costs Farmers, processors, traders, consumers Importers, exporters Developed, developing countries Trade policy implications